Poti & Anaklia Battle for Deep-Sea Dominance

This week, a new wave of dramatic accusations and rumors swept over the Black Sea coast of Georgia.

On Thursday, May 30, Minister of Economy and Sustainable Development Natia Turnava announced that a key permissions document for the new deep-sea port in Poti has been annulled, less than a month after it was granted, and just a day after that information was made public.

Turnava explained that the document in question was not a construction permit, but laid out the pre-conditions for land use of the project. It was issued by the Construction and Technical Supervision Agency of the Ministry of Economy, without, said Turnava, agreement “with any member of the government or with me, personally.” She claims that the Agency head violated ministry procedures when issuing the document, leading to its cancellation and the corresponding dismissal of the Head of the Agency from his position.

The denial of the permissions document may indicate that the plan to expand Poti to be a deep-sea port will not move forward, but the managers of Poti, APM Terminals, have not commented on the future of the project, and say they have not received official notification of the permit denial.

For the past several months, rival investors and developers have been locked in an administrative and political battle for control of Georgia’s deep-sea port market. The plan for a deep-sea port in Anaklia, located about 70 km north of Poti by car, just south of the border with occupied Abkhazia, has been discussed since Soviet times. The Georgian government awarded the Anaklia Development Consortium (ADC), a joint venture of TBC Holding and Conti International, the contract to develop the Anaklia deep-sea port in 2016. The project is estimated to cost $2.5 billion.

APM Terminals Poti was against the Anaklia project from the beginning, arguing that Georgia did not have a need for a deep-sea port, but in the last six months, they changed tack, and instead began moving to develop deep-sea capacities in their own port. Anaklia Development Consortium saw the movement as a threat to their project, and accused the government of making politically motivated decisions.

On May 21, a meeting was held between ADC, government representatives, and international financial institutions – EBRD, ADB, AIIB and OPIC to discuss the funding of the deep-sea port in Anaklia, negotiating eight investor requirements laid out in March. After the meeting, it was announced that a deal had nearly been reached and seven of the eight requirements had been fulfilled. The final requirement, on the subject of cargo transportation insurance, is still being discussed. The Georgian government also continues to insist that the private sector take a larger role in the development, pushing ADC to find private investors.

During her announcement of the annulment of the permission for Poti deep-sea port on Thursday, Turnava affirmed her ministry’s support for Anaklia, saying “we have repeatedly stated that Anaklia port is of strategic importance for us. This project enjoys unprecedented support from the government, including 300 million GEL of infrastructure, 70 million GEL for buying back privately-owned land plots and an additional 100 million GEL in funding.” She called on ADC to not “look for excuses” but to focus on meeting their obligations to find a private investor to complete the project within the planned timeline.

On Friday, Prime Minister Mamuka Bakhtadze echoed Turnava, saying “Society is tired of listening to various conspiracy theories about Anaklia. Nobody will get any benefit from talking about non-existent barriers.” He emphasized continuing government support for and investment in the project, and repeated that ADC should focus on bringing the private sector into the project. “What is needed for the realization of a strategic project when there is such support from state institutions? The simplest thing is needed – fulfilment of liabilities by private companies,” said Bakhtadze.

One of the primary shareholders of ADC is Mamuka Khazaradze, a high-profile businessman and owner of TBC Holding, who was recently embroiled in allegations from the government of financial crimes conducted in 2008. Khazaradze fought back, saying the accusations were unsubstantiated and meant only to tarnish his reputation – evidenced by the fact that no charges have been brought against him or anyone else allegedly involved in criminal conduct. He took to social media to speak out against what he claims are more unfair practices against his company. On Facebook on May 29, Khazaradze shared a post from ADC, with the caption “The Anaklia Project is on the verge of being terminated!!!” The ADC post explained that the consortium and its investors were “shocked” by the fact that, during their May 21 meeting, the government representatives present did not mention that Poti had been granted a greenlight to move forward. He continued, “and the parties involved in the Anaklia Port project consider that if the government does not take immediate and radical action on this matter, the Anaklia port project will be suspended.” Just hours after the angry Facebook post, Turnava announced that Poti’s greenlight had been revoked.

Levan Akhvlediani, the CEO of the Anaklia Development Consortium, says he believes “the recent developments as well as the fact that the permit, issued on May 2, has been kept secret until now makes it clear that there are forces in the country as well as outside it, who are willing to take deliberate steps to hinder the Anaklia port project,” but rejects the ideas of a government-wide conspiracy against his company.

By Samantha Guthrie

Image source: ADC